which is not an expense account
Which is not an expense account?
Answer: In accounting, an expense account refers to specific accounts that track outflows of resources (money or equivalents) due to the consumption of goods or services. Common examples of expense accounts include Salaries Expense, Rent Expense, Utilities Expense, and Supplies Expense.
To determine which is not an expense account, we must understand the different types of accounts in accounting. The primary classifications are:
- Assets: These are resources owned by the company (e.g., Cash, Accounts Receivable, Inventory).
- Liabilities: These are obligations the company owes to external parties (e.g., Accounts Payable, Loans Payable).
- Equity: This represents the owner’s claim on the assets of the company after all liabilities have been deducted (e.g., Common Stock, Retained Earnings).
- Revenue: These are accounts that track inflows of assets from sales or services provided (e.g., Sales Revenue, Service Revenue).
- Expenses: These accounts track outflows due to the company’s activities (e.g., Rent Expense, Salaries Expense).
To identify which item does not belong to the expense account category, we can list some account types and identify the odd one:
- A. Salaries Expense
- B. Rent Expense
- C. Accounts Payable
- D. Utilities Expense
Here, Accounts Payable (C) stands out as it is not an expense account. Instead, it is a liability account. Accounts Payable represents amounts the company owes to suppliers or vendors for goods or services purchased on credit.
Conclusion:
Among the examples given, Accounts Payable is not an expense account. It is a liability account.
Remember, distinguishing between different types of accounts is fundamental in accounting to ensure accurate financial reporting and management.